The China Factor – the Thing to Watch in Global M&A
The merger of Finnish Konecranes and American Terex was affected by an unsolicited bid by a Chinese interloper. This is the new reality, says Johannes Piha, the Head of Mergers and Acquisitions at Borenius.
“If I were to name two global trends in mergers and acquisitions, they’d be China and regulatory intervention,” Johannes says right off the bat. The fact that there is a global economy to start with is in huge part due to China’s entrance into the world scene. Its growth to second-largest national economy in the world has changed the dynamics for good. Today, China is a major player also in the global market of mergers and acquisitions.
With it, China has brought a new and uncharted way in which business is done. The companies are steered by the state, the regulator has a different logic from the customs of the West, and there is often a lack of transparency. Then again, China’s participation has both increased the total number of mergers and acquisitions and grown the size of the deals both in monetary terms and complexity.
“Earlier, the Chinese tended to acquire smaller companies to get access to technology and cutting-edge know-how. Now, they buy to expand globally,” says Johannes Piha, who will serve as the substance expert at this September’s Executive Forum.
The C-level get-together will focus this time on managing global mergers. Panu Routila, who is the C.E.O. of Konecranes, handled a three-continent strategic acquisition during his first hundred days on the job. He will give the executive audience an account of the events.
The task Johannes and I set for ourselves, in preparation for the luncheon, was to decide on the key things a globally savvy business leader will keep on their radar during the Active Season 2016 – 17.
Johannes tells us how requests from Chinese clients are on a rapid rise, whereas Indian business is still fairly rare in cross-border deals.
The emergence of China as well as the increased regulatory tendencies of authorities and politicians emergerd as the key influences. Politicians everywhere feel the pressure to please home audiences, increase tax revenue, address security threats, and soften the effects of globalization.
If you are an Amcham member, join us at the lunch on September 16 to get the full picture!